5 Ways To Compare Term Insurance Plans

5 Ways To Compare Term Insurance Plans

Term life insurance offers many benefits. It is also one of the most cost-effective insurance options. Aside from getting high coverage, you can also get disability coverage, accidental death coverage, critical illness coverage, etc. In some unfortunate events, your family’s financial security may get compromised if you do not consider buying an insurance plan for their support. You must compare term life insurance plans and choose the best term insurance plan for your family to prevent a financial crisis that might occur in case of your demise.

5 ways to compare term insurance plans

1. Ratio of claims settled:

Term life insurance intends to ensure your dependents’ financial security. Based on the total claims filed during the year, this ratio indicates the percentage paid for claims. A higher claim settlement ratio increases your chances of providing a secure future for your family. It also means that having a higher ratio makes it easier for your dependents to take advantage of insurance in your absence and continue to live comfortably.

In addition to checking the claim settlement ratio, it is equally important to check how many claims the insurer has settled. Claims Settlement Ratio only becomes noteworthy when a significant number of claims have been settled.

2. Ratio of solvency:

When choosing an insurer, you should consider the solvency ratio, which provides insight into the insurer’s ability to settle claims if necessary. According to the Insurance Regulatory and Development Authority of India (IRDAI), every life insurer in India must maintain a solvency ratio of 1.5.

When a natural disaster occurs, an insurer receives a large number of claims quickly. In such situations, the solvency ratios are critical since many claims will need to be settled quickly. The financial stability of your life insurer is directly related to the financial security of your family. Despite the possibility of natural disasters, ignoring this crucial aspect may jeopardize your family’s financial security.

3. Cover for Critical Illness:

In case of unexpected events, term insurance protects your family’s financial future. However, a family’s financial security is not threatened only when a family member passes away. A critical illness like cancer or kidney failure can put a family’s finances in a difficult position. It is essential to submit critical illness plans that pay out the covered amount as soon as the diagnosis is made. Critical illness insurance helps to satisfy the high cost of treatment & ensures your family has adequate finances to cope with day-to-day expenses.

4. Availability of Additional Covers:

Most term insurance policies will provide basic life insurance. You must choose a term insurance plan with comprehensive coverage and benefits if you are looking to ensure your family’s financial security. Below are a few benefits you should consider while comparing term life insurance plans online:

  • Premium Waiver: The company pays the life insurance coverage without the requirement of paying premiums when a permanent disability occurs.
  • Death by Accident: This benefit increases the amount assured to be paid to your family members if you die in an accident. Upon death due to an accident, your family members receive an augmentation of the sum assured that will be paid out. A good term insurance plan will usually cover accidental death to the same extent as the base sum assured.
  • Income benefit: Some term insurance plans provide a regular income to your family members instead of a lump sum payout. A term insurance plan with this benefit could provide your family with a monthly revenue in your absence.

You can also look for other benefits like terminal illness insurance benefits, flexibility to increase the sum assured at significant milestones, and increased monthly income coverage.

5.The cost for premium:

After you have analyzed term insurance plans based on the above parameters and whittled your choices down to a few, you can then compare insurance policy costs to make your final decision. But you shouldn’t compromise over any of the above points just for the sake of saving money. The tax benefits of term insurance coverage should not be undervalued.


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